Kentucky businessman set for hearing in cigarette case

LOUISVILLE, Ky. (AP) - A Louisville businessman is scheduled to appear for arraignment on a charge he conspired with others to avoid paying taxes on cigarettes sold online.

Federal prosecutors say Israel Chavez used two businesses - Chavez, Inc., and Cigarettes Direct to You - to sell cigarettes without the proper Kentucky tax stamps. By processing the orders through an out-of-state company, prosecutors say Chavez shorted Kentucky out of more than $2 million in excise taxes.

U.S. Magistrate Judge Dave Whalin is set to oversee Chavez's first court appearance at 2:30 p.m. EDT in Louisville. Court records did not list a defense attorney.

The case is linked to the ongoing criminal proceedings against a Florida businessman and two others who have pleaded not guilty to taking part in the alleged tax avoidance scheme.

(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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